Introduction

This document draws together estimated start up costs for a few common enterprises typically established by new entrants to agroecological farming and forestry.

The primary objective of compiling these examples is to show that new entrants to agriculture and forestry face significantly higher start up costs than new entrants to other sectors of industry. While it is entirely possible to generate decent but modest livelihoods working in this sector, profit margins are both slim and extremely variable, and new entrants often do not have property to secure loans against. This means that securing commercial loans is very difficult. Many farmers also prefer to opt for a more resilient approach of avoiding debt and building the enterprise slowly in a more piecemeal approach.

In almost all situations, new entrants cannot afford to invest up front in the full start up costs and instead piece together sub-optimum systems using second hand equipment over a number of years. Although this approach is a necessity for people starting up farms on low budgets it adds a huge amount of stress to farmers’ lives and reduces the capacity of businesses to deliver their full environmental, social, economic and agricultural potential. In many cases, new entrants will work additional jobs to increase their income during the early years, this means their businesses develop more slowly and are less productive than those run by full time farmers with the capital and resources they need. Furthermore it restricts those who can consider starting farm businesses to those with the resources to survive on very low incomes during the establishment years, which excludes many people from following careers in agroecological farming or forestry. To overcome these impacts we believe that policy makers should be looking at options to assist new entrants with start up costs.

The start-up costs and outline businesses that we use in this document are based on existing examples, although in most cases the farmer built the business over a significant number of years, as and when finance was available.

As every farmer knows, no two situations are ever the same and so everyone will face different costs, opt for different production systems and take advantage of different opportunities. This is even more pronounced in businesses selling directly to the public. As such, the start up costs we highlight should be used as a rough guide for policy makers rather than a road map for prospective new entrants. In general, we have provided a price range that is below the price of new equipment but represents the range of good quality second hand options available.

Furthermore, it is important to bear in mind that the businesses we are outlining represent enterprises run by experienced and highly skilled farmers and foresters, and it would take a prospective new entrant, with access to high quality training and mentorship a number of years to reach these levels of productivity and financial returns.

This document should be read alongside the Landworkers’ Alliance policy document ‘Supporting the next generation of farmers: proposals for support schemes to assist the establishment and success of new entrants to agroecological farming’ which outlines the social, environmental and agricultural justifications for supporting new entrants.

Estimates for average small business start up costs across all sectors range from £12,0001 to £27,5202 whereas in many cases the start up costs for agroecological farm businesses are likely to be between £50,000 - £250,000 before land and housing is taken into account. Furthermore, the low profit margins and high risks of agricultural and forestry work mean that the repayments on a commercial loan to cover start-up costs are usually unaffordable.

Many businesses can provide viable livelihoods for 1 – 4 FTE on small areas of land. However, with profit margins after the farmers labour is accounted for often well below 10%, and extremely variable, depending on factors like weather which are outside of the farmers’ control, they are often unable to cover the costs of loan repayments.

For example, with £200,000 start up costs, and a £25,000 deposit taking out a business loan at 4.5% incurs an annual repayment of £11,664 over 25 years. This is impossible in the first years of most farming business, and an unrealistic risk for many businesses in the longer term. We have developed model start up costs for nine common businesses. These do not include annual running costs, or the significant costs associated with getting planning permission and are intended as a rough guide rather than a detailed analysis. We have included different cost levels depending on whether the land is bought or not, and whether there is existing infrastructure to give an indication of the range of variation in different possibility. In reality, in some situations some of these costs would not be relevant, some sites will not need a borehole for example, or the 100m of track may be excessive. However, in others they may be considerably more. In general these estimates are likely to be on the optimistic side.

The stocking and production levels included in these estimates are those common for agroecological and organic systems.